CNSW Market Update – 18/05/2018

Markets have really gone into drought mode this week, and as each week passes with no rain the crop outlook becomes more negative.

International markets haven’t really shown any great movements over the last seven days, but it’s the situation here at home that has been causing prices to surge once again.

Cereal grains have firmed anywhere between $10-15/MT across the board, and even with the recent upside, buyers are still finding it very difficult to accumulate grain.

This begs the question; at what price will growers sell the remainder of their stock? The answer isn’t as simple as it seems, as selling orientation seems to be correlated with weather rather than price.

Quite simply the outlook is remaining dry, and while that trend continues the market could rally another $20/MT and we still wouldn’t see too much seller engagement.

On the flipside of this, if we did see significant rain on the forecast, sentiments of both buyer and seller would quickly change. Growers would look to evacuate old crop longs more rapidly if new crop prospects significantly improved.

We are now into the second half of May, when traditionally almost all canola acres would be in the ground but without sufficient moisture to allow sowing, acres remain well back.

It’s not looking great for canola this year, especially for crops dry sown with the hope of receiving follow up rain. But given the current pricing in wheat and barley, growers won’t flinch too hard at the prospect of switching to cereals.

Dry sowing continues to tick along, but it is now starting to slow up as a lot of growers have reached their limits on how much they feel comfortable dry sowing.